Harvard Will Keep Controversial Health Plans, Faust Says, But Will Subsidize Some Affected Employees

UPDATED: November 14, 2014, at 1:15 a.m.

Amidst a storm of criticism surrounding recent changes to the benefit plans Harvard offers to non-union employees, University President Drew G. Faust wrote Thursday night that Harvard will keep the controversial changes in place for 2015 but will also establish a fund to mitigate cost increases for some employees and explore alternative plan designs for the future.

“It is clear...that the 2015 health benefits options are causing distress among some members of our community,” Faust wrote in a letter to faculty and staff, explaining that the enrollment period for the plans has already begun. “It is not feasible to alter these plans for 2015 as they are negotiated with vendors over a period of many months, and we are already into the enrollment period for the new plans.  I hope, however, that we can mitigate some of the current anxiety as we simultaneously assess the impact of these changes in the year ahead.”

Following a round of tense back-and-forth between administrators and faculty members at last Tuesday’s meeting of the Faculty of Arts and Sciences, the body unanimously voted to request that Faust and members of the Harvard Corporation reverse changes to the University’s health benefits policy for non-union employees, including faculty members.

Responding to that vote, as she said she would after last week’s meeting, Faust enumerated four points of action. She wrote that Harvard will establish a fund that will support affected faculty and staff who see their costs, excluding premiums, exceed 3 percent of their salary. Faust said that more specifics on that fund will be released soon.

Faust also said that the University Benefits Committee, which recommended the controversial changes, would explore the possibility of introducing more specialized plans that might cut costs to the insured by offering a narrower care network.

Additionally, Faust wrote  that the UBC is preparing to host several town hall meetings in the coming weeks about the changes and the work ahead. She said that she and Provost Alan M. Garber ’76 have asked the committee to closely monitor the progress of the new plans and provide an interim report by the end of June 2015.

Faust also noted that the Harvard Corporation, which has stayed publicly silent on the new policy and criticisms of it, has considered and fully supports the new plans.  

“The Fellows...have affirmed their confidence and support regarding the judgment of the UBC and the administration in seeking both to address the escalating costs of health benefits as a significant driver of university expenses and to ensure our faculty and staff’s continued access to strong benefits and excellent care,” she wrote.

In the letter, Faust also addressed some of the criticism  voiced by FAS faculty members in the past several weeks, specifically on the rising cost of health care and comparisons of the policy with that of Harvard’s peers.

“There are many different ways of measuring health care costs at Harvard, but careful analysis of any of these statistics points to the same conclusion: Harvard’s health benefits costs have increased significantly and are expected to do so for the foreseeable future,” Faust wrote.

The health cost statistics initially used by University officials to back the changes came under fire last month  for misrepresenting the pace of the increase. In her letter, Faust cited that the compound annual growth rate for active and early retiree health benefits was almost twice as much as that of the University’s operating revenue. In addition, she pointed to a $55 million deficit for FAS, though the University as a whole—to which this policy applies—reported a small surplus of $2.7 million for Fiscal year 2014.

Faust also commented on the new policy in relation to those of Harvard’s peers in response to a common criticism by professors that other institutions have superior plans.

Noting how difficult it is to compare complicated benefits packages, Faust wrote that on a range of factors, “Harvard’s 2015 health plans do compare well with those presented by our peers in 2014, and they reflect the traditional desire of our community, located in the midst of some of the most outstanding physicians and hospitals in the world, to retain access to a wide range of providers and facilities.”

Leading faculty critics of the changes called the measures laid out by Faust a small improvement, but reiterated the need to a full reversal of the policy.